(By Balaseshan) Paychex Inc. (NASDAQ:PAYX) reported a 3% increase in quarterly earnings helped by a double-digit growth in human resources services revenue and a moderate increase in new payroll sales. Despite revenue missing consensus, earnings came in-line with Street's expectations.
Earnings for the first quarter were $153.1 million or $0.42 per share, up from $148.9 million or $0.41 per share last year.
Revenue increased 3% to $578.2 million.
Analysts, on average, polled by Thomson Reuters had expected a profit of $0.42 per share on revenue of $584.05 million for the first quarter.
Payroll service revenue rose 1% to $385.9 million. Checks per payroll increased 2.0%. Revenue per check grew modestly, impacted by price increases, partially offset by discounting.
Human resource services revenue grew 7% to $182.2 million. Paychex HR Solutions revenue was positively impacted by the favorable trend in checks per payroll, price increases, and growth in both clients and client employees.
Interest on funds held for clients, which was included in the total revenue, declined to 1.2% from 1.4%, due to lower average interest rates earned.
Looking ahead into the fiscal 2013, the company still expects earnings to increase 5% to 7% and service revenue growth of 5% to 6%. Street analysts expect earnings per share to increase 7.50% from last year on revenue growth of 5.30%.
Interest on funds held for clients and investment income for fiscal 2013 are expected to continue to be impacted by the low interest rate environment, the company said. Previous acquisitions are expected to have minimal impact on projected revenue growth rates for fiscal 2013.
PAYX closed Monday's regular session down 0.49% at $34.38. The stock has been trading between $25.20 and $34.70 for the past 52 weeks.